With these proposed amendments directly linked to the ‘YES’ initiative, the focus of black empowerment has now significantly shifted from a narrow focus on ownership to a broad focus on employment and development. The proposed amendments are constructive and well-construed as they encourage corporates to contribute to empowerment in targeted areas of national priority – upskilling the youth and addressing unemployment through job placement.
For ease of reference and in order to reduce the complexity of the proposed amendments, we have outlined the salient points. Find a copy of the full Gazette right here.
A new indicator for Skills Development has been introduced in the form of Bursaries for black people at Higher Education institutions. This was done by redirecting points from Learnerships and general Skills Development spend (reducing learnership points from 8 to 6 points) and introducing a separate target for bursaries at 2,5% of the leviable amount with a weighting of 4 points.
Double counting (dipping) is not allowed between bursaries skills spend and the overall Skills Development target spend and no double counting is allowed in respect of learnerships for black people and learnerships for black unemployed individuals.
Government is very serious about alleviating the extremely high unemployment statistics for black youth by incentivising the private sector to participate through rewarding companies with enhanced B-BBEE scorecard levels if they meet the eligibility criteria and the set targets for work experience and job absorption. YES is a business-led initiative implemented in partnership with government, labour and civil society. The YES initiative aims to place more than 1 million young people in internships in businesses over a period of three years.
The YES initiative target for generic entities is calculated as the greater of : 1,5% NPAT target divided by R55 000; or 1,5% of Measured Entity’s headcount in preceding year; or the value in the company turnover band in Table 1.
The YES initiative target for QSEs and EMEs is determined by the headcount band in Table 2.
Enhanced recognition for scorecard entities:
The ‘YES’ initiative will enable generic entities to maximise their B-BBEE scorecards by reaching and exceeding the YES targets that are set. Benefits are as follows:
An interesting feature of the proposed amendments is the automatic recognition for large black-owned companies (generic entities with annual revenue exceeding R50 million). Generic entities will be deemed to be B-BBEE Level 1 with 100% black ownership or B-BBEE Level 2 with at least 51% black ownership without having to do a scorecard. Only scorecard clients can increase their level with the YES initiative. Generic ARLs (Automatic Recognition Levels) must be measured on ownership alone.
The proposed amendments aim to promote innovative ways to increase the participation of black South Africans and in particular black youth in our economy. The Dti has invited members of the public to participate in a 60-day public commentary process on these proposed amendments to the B-BBEE Codes of Good Practice on or before 29 May 2018. We encourage our clients and other impacted business to contact us for specific guidance on how these amendments are likely to affect them.
About the author: Gideon Gerber is one of the founding directors of SERR Synergy and an admitted High Court attorney with more than 30 years’ experience in Business Structuring & Compliance, Training, Skills Development and Business Compliance in South Africa, the UK and Namibia. He obtained his Master’s Degree in Law from the University of Pretoria with a research dissertation on B-BBEE Fronting. Gideon is a regular speaker at various B-BBEE seminars and writes articles for the Business Day and Landbouweekblad that concerns B-BBEE Matters.
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